7 Steps to Living Debt Free

This painless plan will help you beat the credit card blues  for good

I don't know about you, but my e-mail is clogged with offers of "easy" ways to get out of debt. They promise to rescue me from my folly and to cut my monthly payments by 50 to 75 percent. There's only one way to respond to junk like this: delete, delete, delete.

If you're like most people, you could clean up your credit card balance within a year if you made it a priority. And you should. Why throw away precious money on interest every month?

If you're able to pay the minimum amount on your credit card bills every month but the balances stay about the same, that's more of a reason to get serious. You should bring these bills down to zero from time to time, just to prove that you're living within your means. If your credit card debt is creeping up, or if your balances linger pretty close to your credit card limits, that's a bigger worry: One unexpected setback could plunge you into financial hell and could even affect your credit rating.

If you're among the minority and have overwhelming debts, you're probably scared stiff. You feel stupid, cry at night, and fight with your husband. And you may not see any acceptable way around your problem (bankruptcy is a bummer). So listen up. Here's how to get your life back.

1. Quit buying on credit. Put your credit cards on ice (some people actually pop them in a bowl of water in the freezer), then stick to cash. If you can't afford to buy with what's in your wallet  or on a debit card  pass it by.

2. Post your debts. Make a list of the amounts you owe on each credit card and tape it to the refrigerator. Next to each debt, write the interest rate and the minimum monthly payment required (or the larger monthly payment you intend to make). List the debts in order of size, the smallest first. (If you're paying off a big medical bill or student loan, include that too.)

Then, every month, pay the fixed amounts you put on the list. As the bills shrink, your creditors will reduce the minimum payment. After all, they want to keep you paying for as long as possible. But don't succumb. The key to this get-out-of-debt strategy is keeping your payments level, so you'll be reducing more of the principal every month. When one credit card is clean, apply that payment to your other cards. After a few months, you'll be surprised at how rapidly those debts have declined.

3. Find cheaper consumer credit. If you're paying high interest rates on your credit cards  some creditors charge as much as 25 percent  it may make sense to transfer your debts from your present cards to one of the new low- or no-interest cards. But be sure to read the fine print. The teaser rate on many of these cards doesn't last long  usually six months. So shifting debt is best for people who know they can pay it off before the rate goes up.

If you do transfer, be vigilant about paying on time. Just one late payment will immediately push you to a higher rate. And don't forget to cancel your old card or you'll soon be racking up charges on it again.

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